Bank of England Hints at Rate Hike to Combat Inflation

The Bank of England has kept its interest rates on hold but hinted at a possible hike soon to combat inflationary pressures.

The decision was widely anticipated, with six members of the Monetary Policy Committee voting to keep rates unchanged while three backed a quarter-point increase to 4%.

Bank Governor Andrew Bailey said that so far, higher global energy costs have had a limited effect on price and wage setting in the U.K., but warned that if this volatility persists, the impact will be bigger, making it more likely for the bank to raise its interest rate.

The inflation outlook is key, with some central banks having already decided to raise borrowing costs. The Bank of England's minutes showed that inflation is expected to rise to around 4% in the first quarter of next year from the current 3.1%, taking it further above the bank's target rate of 2%.